Process cost calculations structure

When the process cost models are ready, we can come to the single calculations of logistic cost components. Important fact here is the standard unit of reporting the costs. In all following calculations, this will be one transported part.

Figure 37 – Process Costs Model for DFLD

Figure 38 – Process Costs Model for IMWD

Transport cost per part [€/part]

Main transport cost driver is the transport distance. Usually transport rates are decreasing with larger distance and growing with lower distance (scale effects).

Transport distance is defined by the Place of loading (seller) and Place of delivery (buyer) and is thus not changing in a logistic flow cost calculation (constant input rate). In both of analyzed logistic flows, full load transports are considered. This means that each of the delivery is using the complete loading space (trailer or container). In such cases, transport rates are offered or negotiated directly with the forwarder and they are seen as direct inputs in the calculations. Another important parameter is the number of Unit Loads per delivery. Together with the UL density, it indicates the number of parts in one delivery. Number of ULs per delivery is defined by the mean of transportation, the UL dimensions and the stacking factor. Here are the input parameters; trailer/container loading space surface, UL footprint and the stacking factor:

Nr.of ULs in delivery = Trailer/Container surface : UL footprint (L x W) x Stacking factor

The result of the multiplication rounded down on full figure gives us the number of ULs in the first layer of the loading space. Stacking factor is depending from the stackability of the packaging and the UL height. Stacking factor is one of the most important input parameters, which can be influenced by suitable packaging specification and design.

In DFLD, the transportation time usually doesn’t take more than 2-3 days (within Europe). This means, that the Capital costs for the goods in transit are not as relevant as in the Intercontinental sea shipments so they will not be considered for calculations in continental transports. Total Transport costs per delivered part in DFLD are calculated as follows:

DFLD Transport costs per part = Transport Costs : Nr.of ULs in delivery : UL density

In the IMWD, there are minimum two transport streams in the logistic flow, main and secondary stream. Therefore, we need to calculate the transport costs from both of them. Moreover, the transport time sometimes takes 4-6 weeks so the Capital costs must also be considered.

Capital costs per transported part = Parts price x WACC x Days in transit : 365 days

Total Transport costs per delivered part in IMWD are calculated as follows:

IMWD Transport costs per part = (Main stream TC + Secondary stream TC) : Nr.of ULs in delivery : UL density + Capital costs per part

Handling costs per part [€/part]

Handling costs, which can be directly influenced by the seller, are mainly occurring in his own premises (see Standard processes in Chapter 5.4.1). Other Handling cost, like in the port of loading or cross-dock warehouse are usually included in the negotiated transport rates from the forwarding company. In both flows, the Handling costs are calculated as the total time of handling of the ULs by a forklift times the forklift rate (incl.the driver) divided by the number of all handled ULs and its density.

For this calculation, different numbers of ULs per handling will not be considered.

Handling costs per part = Total handling time x Forklift rate : Nr.of handled ULs : UL density

Personal costs per part [€/part]

Similar to handling costs, personal costs calculated in both flows are seen from the seller’s perspective. Total personal time of all processes and personal costs are giving us the total personal costs of all (administrative) processes for the delivery.

Nr.of ULs per delivery and the UL density gives us then the Personal costs per part.

Personal costs per part = Total personal time x Personal rate : Nr.of ULs per delivery : UL density

Warehouse costs per part [€/part]

Here we have to make the difference between the DFLD and IMWD. In Direct (continental) deliveries, there is no real warehousing switched into the logistic flow,

just a short term buffer stock. Cost for buffer stock are only internal costs of the dedicated storage (mainly fixed costs) divided by the number of stored/buffered ULs.

We could calculate these costs on the basis of “opportunity costs”. However, internal warehouses can usually not be used or rented for external customers. Therefore, in case of DFLD, no warehousing costs will be considered.

In case of IMWD, mainly external warehouses with real storage cost must be considered. Warehouse costs are calculated from two parts; Storage costs and Capital costs. Storage costs are usually calculated in Euro per pallet/UL per day.

Capital costs are calculated similarly as for the goods in transit, just the transit duration is replaced by the days in stock. In the IMWD there is more than one Warehouse cost calculation needed based on the number of warehouses used during the flow.

Storage costs per part = Storage costs per UL x Days in stock : UL density Capital costs per stocked part = Parts price x WACC x Days in stock : 365 days

Total Warehouse costs per part = Warehouse Nr.1 costs per part + Warehouse Nr.2 costs per part + …. + Warehouse Nr.n costs per part